战略管理课件-BM301-Lecture-Week-04-industry-analysis---strategy-management.ppt

Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,Welcome to BM301 Strategic Management,Industry Analysis,INDUSTRY ANALYSIS,“Structural analysis gives us a framework for understanding the competitive forces operating in an industry that are crucial to developing competitive strategy”,Porter(1980),“It is the firm that matters,not the industry.Successful businesses ride the waves of industry misfortunes”,Baden-Fuller and Stopford(1992),INDUSTRY ANALYSIS,For many strategists,it is the structure of the industry that has a large bearing on the success,or otherwise,of organisations.In this context,this session has 4 main aims:,To analyse the Industry Life Cycle model and the implications for strategy,To examine Porters Five Forces model and its relationship to strategic choice,To undertake an evaluation of industry analysis,To examine whether it is the industry or firm that matters,Industry Sales,Time,Introduction,Growth,Maturity,Decline,Industry Life cycle,INDUSTRY LIFE CYCLE,In order to clarify the general types of strategy to be followed,it is important to establish at what stage of its life cycle the industry is at.An industry will go through 4 main phases:,Introduction:,-Sales develop slowly and profits are small or non-existent,Growth:,-Sales grow rapidly as profit and competition increases,Maturity:,-Sales growth slows,pressure on profits and focus starts to switch to cost reduction,Decline:,-Price competition,cost controls and cyclicality,INDUSTRY LIFE CYCLE:STRATEGIC IMPLICATIONS,At each different stage of the life cycle there are different strategies that can be followed.For example,Introduction:A first mover strategy or a fast second follower.One of the aims is to become the industry standard,Growth:Market penetration,market entry strategies and segmentation or differentiation strategies.One of the aims is to become the market leader,Maturity:Efficiency or cost reduction strategies come to the fore.This could involve the relocation of operations.One of the aims is to defend the position in the industry,Decline:Cost reduction strategies become paramount and exit strategies start to emerge.One of the aims is to either reinvent or exit the industry,INDUSTRY LIFE CYCLE:ISSUES,There are number of issues surrounding the industry life cycle as a tool on which to base strategy.For example:,Impact of technology and innovation As with the product life cycle,this can have a significant impact on,for example,the length of the stages of industry life cycle,Extensions to the industry life cycle The issue here is where does one industry end and another begin?,Do all industries follow the same shaped curve?,Example mobile phones,What industry are they in?,Communications?,Entertainment?,Information?,Games?,Photography?,What life cycle stage?,Maturity?,Decline?,Rebirth?,PORTERS FIVE FORCES MODEL,It is important to think about the context of this model:,The Classical School of strategy,Prescriptive/Profit Maximisation,Rationality and Analysis,As part of a wider strategy process,External Analysis,Choice,Implementation,The key question should always be,how does this environmental factor affect my ability to maximise profits?,The basic source of profit,The creation of customer value,.,Operations transforms inputs into goods and services for the customer.,For operations to be profitable,the first criterion is that the value of the product or service created(as measured by the price that the customer is willing to pay)exceeds the cost of the inputs used in its creation,.,The stronger competition is between producers,the greater is the proportion of the surplus gained by customer,(“consumer surplus”),and the less producers earn,(“producer surplus”or“economic rent”).,The profits earned by the firms in an industry are determined by three factors,The value of the product or service to customers;,The intensity of competition;,The relative bargaining power at different levels in the supply chain.,Porters“Five Forces of Competition Framework”,Potential,Entrants,Buyers,Industry,Rivalry,Substitutes,Porter,M.E.,(1980).Competitive Strategy,New York:Free Press.,Suppliers,Porters“Five Forces of Competition”Model,views the profitability of an industry as indicated by its,rate of return on invested capital,relative to its,cost of capital,as determined by five sources of competitive pressure.,The Model includes,Three sources of vertical competition:,Competition from the suppliers of substitutes,The threat of competition from entrants,Competition from established producers,Two sources of horizontal competition,The bargaining power of suppliers,The bargaining power of buyers,Barriers to Entry,Economies of Scale,Absolute Cost Advantages,Capital Requirements,Product Differentiation,Access to Distribution Channels,Governmental and Legal Barriers,Retaliation by Established Producers,Relative Levels of Profitability,Barriers to entry in Higher Educational field,The Quality Assurance Agency have to approve you;,The government have to authorise you to grant degrees.,Buyer Power,Price sensitivity,cost of product relative to total costs,Degree of product differentiation,competition between buyers,Bargaining power,size and concentration of buyers relative to suppliers,buyers switching costs,buyers information,buyers ability to backward integrate,Buyer power in the grocery business,A number of possible supermarkets to use;,“Corner shops”though less of these;,Farmers markets;,Allotments.,Threat of Substitutes,Not brand substitution,Availability of substitutes that perform same or similar function/alternative uses for discretionary income,Buyer propensity to substitute,Relative price performance of substitutes,Relative switching costs,Substitutes in the transport industry,Cars;,Busses;,Trains;,Cycling;,Walking;,Helicopter!,They are not all perfect substitutes,Supplier Power,Factors determining power of suppliers relative to producers are similar to those determining power of producers relative to buyers.,Supplier power in medical care,NHS,Private,Via insurance,Via personal wealth,Industry Rivalry,Concentration of the Industry-competitors are of near equal size and are seeking dominance,Industry is mature and subject to shakeout,Product Differentiation-if product homogeneity is high,Industry Capacity&Level of Exit Barriers-high fixed costs provoke price wars to keep capacity filled.High exit barriers-New influxes of capacity,Cost Conditions,Profitability of the Industry,Rivalry in the car industry,Overcapacity;,Falling demand due to the recession;,Inefficiency in some firms;,Ecological issues.,Key Success Factors,What Do Our Customers Want?,How do we Compete in this Industry?,What Does the Firm Need to Do to Survive Competition?,The Configuration of the Value Chain-Cost Drivers.,Appropriate Skills&Resources,Identifying Key Success Factors,GENERAL PREREQUISITES FOR SUCCESS,The Ability to Survive,Competition,ANALYSIS OF COMPETITION,The main structural drivers?,The principal dimensions?,Intensity?,How to obtain a superior position?,Supplying a product for which customers are willing to pay a price that exceeds the cost of production.,ANALYSIS OF CUSTOMERS,AND DEMAND,Who?What?How?,KEY SUCCESS FACTORS,Key success factors,Steel-Cost efficiency/Scale,Grocery-Prices,Product Range,Convenience,Fashion-Speed of Response/Quality v low cost Brand,/Reputation,PROBLEMS WITH THE MODEL,Historically,there have been 8 main criticisms of this model:,The model only works in static circumstances,It assumes the organisations interest always comes first,It assumes that buyers are of no greater importance than other factors,It assumes the environment is hostile(threats and not co-operation),It ignores the human element e.g.national culture,It assumes that environments are predictable,It assumes that an industry can be delimited in order to analyse,It assumes the pre-eminence of industry as a causal factor of success,Strategic Group Analysis,Geographic scope,Product Range,Global,International,Domestic,Niche,Broad,Narrow,Toyota,Nissan,VW,GM,Ford,PSA,Porsche,Rolls-Royce,BMW,Fiat,Saab,Chery,SAIC,Morgan,INDUSTRY OR FIRM?,According to Baden-Fuller and,Stopford,(1992),it is the firm,not the industry,that is the main causal factor for success.Focusing on the industry is the old way,based on the assumptions that:,Some industries are intrinsically more profitable than others,In mature environments it is difficult to sustain high profits,It is environmental factors that determine whether an industry is successful,not the firms in the industry,The new view is:,There is little difference in profitability of one industry versus another,There is no such thing as a mature industry,only mature firms,Profitable industries are those populated by imaginative and profitable firms,INDUSTRY OR FIRM?,PERCENTAGE OF BUSINESS UNIT PROFITABILITY EXPLAINED BY:,Choice of Industry:8.3%,Choice of Strategy:46.4%,Parent Company:0.8%,Not Explained(random):44.5%,Source:,/,